Newton, NC, Implements City Wi-Fi

The first phase of a public wi-fi service covering a portion of the downtown area of Newton, North Carolina, became active in August. The service, however, is anything but free for local taxpayers footing the bill, says Michael Sanera, a scholar with the John Locke Foundation, a North Carolina-based free-market think tank.

Sanera, who opposes tax-funded municipal wi-fi and wireless broadband systems, says, “Newton is the latest town to harm local business by using taxpayer funds to provide free wi-fi downtown.”

He notes many businesses already offer wi-fi services for their customers, adding, “Now the city, using taxpayer money, will be subsidizing those businesses that failed to install wi-fi. Just as cities should stay out of the fiber-optic cable business, they should also stay out of the wi-fi business.”

Covers 48 BlocksThe first phase of Newton’s network covers a six-by-eight block area, and the city has announced plans to cover the entire downtown area plus Newton’s outlying areas. During the first month of service, the city reported 629 different devices connected to it, with 144 of those connections occurring on August 18 during the city’s annual Soldiers Reunion Day.

“We’ve launched the first phase, which covers the downtown area and parks,” said Newton Information Systems Director Jason Clay. “Our next phase will cover the entire 12 square miles [surrounding Newton].”

In a press release, Newton Mayor Robert A. Mullinax said, “The City of Newton is pleased to offer free wi-fi in our downtown area, and I encourage our residents, business owners, and visitors to utilize this unique benefit.”

Mullinax added, “This is uncharted territory for the City, and I’m sure this will enhance our daily lives and the vitality of the downtown area as time goes by.”

“Jason initially came to the City Council with a $150,000 plan to launch the system,” he said. “We asked him if this was something that could be done more inexpensively, and he came back with a plan that cost the city only $3,000.”

Last spring, North Carolina passed a law that requires a public vote before cities can borrow money for municipal wi-fi projects, prohibits the use of utility funds to pay for community cable and wireless networks, and requires municipally owned and operated public communications systems to meet the same legal requirements as their private competitors. The bill doesn’t forbid cities from establishing public wi-fi or broadband cable systems that directly compete with private companies offering the same services.

“Newton is exempt” from the law, said Clay, “because we’re not competing” with private companies and are offering the service for free.

“Our services are for outdoors use, not inside businesses or homes” said Clay. When asked whether some businesses and households could take advantage of the city’s free wi-fi, Clay responded, “If so, it’s great.”

Taxpayers Still PayClay added, “We’re providing this service at no cost to customers. We own the power poles and equipment,” he said. “If something happens, we replace it.”

Sanera says Clay’s calculation is inaccurate because it neglects the costs of city employees. “The claim that it only cost $3,000 is disingenuous on its face,” he said. “It’s the difference between the seen and unseen.”

Sanera notes, “The Newton Web site says city engineers mounted the antennae on equipment previously owned by the city, and that Mr. Clay saved the city further dollars by designing the system and training staff himself. What is the value of the time of these government employees? What about the costs of office space, mileage, and electricity used by these employees?

“These costs are captured by businesses in the private sector, but aren’t by Newton’s bureaucrats. The labor costs that are considered free by Mr. Clay’s standards represent the highest costs to their competitors. Some people may employ these services for free, but Newton taxpayers are still paying for all of it,” he added.

‘Bureaucracy Comes First’Clay said the city’s 1MB bandwidth is enough to download and watch YouTube videos and NetFlix movies. “We’re not competing with any other businesses,” said Clay. “If customers want more bandwidth, they can purchase it on their own from private providers.”

Sanera says many North Carolina local governments are delaying reevaluations of property taxes during the current economic downturn to increase tax revenues, which many cases will be used in part to fund the city’s wi-fi system.

“Some county commissioners want to continue to collect revenue based on inflated housing valuations,” Sanera said. “Their mindset is that the county bureaucracy comes first, before the county taxpayers that they were elected to serve. It is just one of the many reasons that so many citizens are cynical about government at all levels.